Tax Havens, Offshore Issuance and the Global Financial System
Saturday, Jan. 4, 2020 10:15 AM - 12:15 PM (PDT)
- Chair: Hyun Song Shin, Bank for International Settlements
Redrawing the Map of Global Capital Flows: The Role of Cross-Border Financing and Tax Havens
AbstractCross-border capital flows are often opaque, involving multiple layers of corporate ownership
and the use of shell companies in tax-haven countries. As a result, available statistics often miss
important dimensions of how capital is allocated globally. We provide a methodology to unwind
corporate ownership chains globally at the security level. We trace back issuances made in tax
havens and through multiple layers of opaque offshore holding structures in order to identify the
firm, industry, and country facing each ultimate economic liability. Our data covers the universe
of securities, 26 million securities, from a total of 1.8 million distinct immediate issuers. We
provide, based on our estimates, a dataset of bilateral positions restated to reflect the unwinding
of opaque structures. The existing data significantly understate the size of corporate debt and
equity financing flowing from developed-market investors to firms in large emerging economies.
Private debt and equity flows from the U.S. and Eurozone to BRIC economies are 700% and
140% larger than previously thought, respectively.
US Banks and Global Liquidity
AbstractWe characterize how large U.S. banks supply dollar funding liquidity in the post-crisis regulatory regime. Using regulatory filings for the Basel III Liquidity Coverage Ratio assessment, we construct daily snapshots of global consolidated bank balance sheets for large U.S. banks by currency. We focus on the most quantitatively important and scalable components of short-term liquidity provision through collateralized lending in repo and FX swap markets. We find that large U.S. banks increase the amount of dollar liquidity provision mainly by drawing on their excess reserve balances at the Fed in response to dollar funding shortage, particularly at period-ends when foreign banks contract dollar funding intermediation and when the balance at U.S. Treasury General Account increases. Finally, we discuss factors that led to banks' reduced willingness to supply liquidity that resulted in a squeeze in the short-term funding market in September 2019.
- F3 - International Finance